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Reaping Returns on RFID Investments

Before applying the technology to comply with your customers' supply chain requirements, first analyze your company's own business processes.
By Jason Acidre
Oct 04, 2010Radio frequency identification has long been rated as the technology of the future, and constant research is being directed toward using Electronic Product Code (EPC) RFID tags to align all trading partners down the length of the supply chain. Instead of applying the technology blindly to comply with a customer's supply chain requirements, a company must first analyze its own business processes.

At present, RFID is unable to provide the coordination stipulated by supply chain implementation requirements, and is not equipped to handle the complexities involved, even though it yields a quick return on investment in factory and warehouse operations in various industries. RFID can be a money saver for manufacturers that face repeated bottlenecks, that need to slash their workforce employed for materials management and replenishment, and that want to be able to trace materials.


Closed-loop industrial applications, such as parts identification, replenishment, fleet and asset management, and work-in-process (WIP) tracking, do not require businesses to involve their customers, suppliers, outside organizations or logistics providers in their RFID plans. This enables them to more freely adopt RFID for a diverse range of applications, using proven top-quality products that comply with international standards.

RFID is comparable to a part of a toolbox in which a single tool is not useful for every task. Similarly, the technology is one part out of a complex system that typically incorporates bar codes, mobile computers, material-handling systems, wireless LANs and industrial controls, all of which help to manage assets and materials well. It is incorrect to see a tag's capabilities and forcibly apply them to every application. Instead, an RFID solution can be designed from the perspective of the business process, and by identifying the levels at which data is classified and communicated, as well as the actions subsequently taken. This will enable companies to see the value of RFID beyond the tag in question.

RFID for Value Addition in Applications
RFID has been used in commercial applications for the past 30 years. Industrial applications find it particularly useful for routing materials automatically, tracking equipment and identifying containers carrying goods. RFID adds maximum value in situations in which an item needs to be traced through its entire cycle or a whole process, since it is in these situations that labor costs are high and the probability of errors makes it expensive; in operations where labor or time constraints necessitate a system of quick replenishment; and for process that require more detailed information about an item, beyond what can be stored in a bar code. No other form of automated data-capture technology can match RFID in any of these applications. Thus, RFID proves its worth in terms of value and control in product genealogy and lifetime traceability, materials management and replenishment, just-in-time (JIT) and Kanban environments, asset tracking, and warehouse and yard management

Lifetime Traceability and Product Genealogy
Many organizations require lifetime identification for their products, and need to trace the genealogy of those goods. This is typically the case in the aviation industry, in which an airplane will not be able to fly if it lacks lifetime service records or lifetime identification. Any errors in maintaining records or a misidentification in this industry can cost millions of dollars, and necessitate the replacement of expensive parts. This is why the aviation industry leads in the adoption of RFID product-tracking standards and identification applications. There are many other industries with similar needs.

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